Common ground
A traditional IRA allows you to contribute money that can grow tax-deferred. A Roth IRA holds after-tax money you can withdraw tax-free. They sound fundamentally different, butbothare tax-advantaged accounts designed to help you save for retirement. They share other similarities too:
1.No age limit
You can contribute to both a Roth IRA and a traditional IRA at any age as long as you're otherwise eligible. However, when you reach age 73,1 you'll be required to start taking annual distributions from your traditional IRA.
2.Contribution limits
You typically need earned income to contribute to an IRA. For both traditional and Roth IRAs, the annual contribution limits for the 2023 tax year are $6,500 for those younger than 50 and $7,500 for those age 50 and older. The annual contribution limits for 2024 are $7,000 for those younger than 50 and $8,000 for those age 50 and older.
These are total amounts across all your traditional and Roth IRAs; you can't contribute the maximum amount to each account separately. Depending on your income, your contribution limits may be lower. If you're married and your spouse earns low or no annual wages, they may be able to open a spousal IRA to boost your retirement savings as a couple.
3.Contribution deadline
Whether you're contributing to a traditional or a Roth, the deadline to contribute is the same for both accounts, and it's the tax-filing deadline for the tax year. For the 2023 tax year, the deadline is April 15, 2024. For the 2024 tax year, the deadline is April 15, 2025.
4.Transfer or rollover
You can transfer your IRA to another similarly registered IRA through a direct transfer. You can also withdraw money from your account for 60 days as long as you roll it back into the same or a similarly registered IRA. You can use this60-day rolloveroption once every rolling 365 days. When you use the 60-day rolloveroption, taxes may be withheld from the withdrawal, so you'll have to use other funds to roll over the full amount of the distribution.
